Oil falls after Trump urges OPEC not to cut supply

Cornelia Mascio
Novembre 13, 2018

Crude oil production outside the Organization of Petroleum Exporting Countries is set for further-and more intensive-growth this year and next, according to the latest monthly report of the cartel.

Oil prices fell more than 1 per cent on Tuesday, with benchmark Brent crude slipping below US$70 per barrel and US crude under US$60, after US President Donald Trump put pressure on OPEC not to cut supply to prop up the market. This year, OPEC sees USA production growing by 2.06 million bps from 2017 and further by 1.69 million bpd in 2019. USA light crude was $1.35 lower at $58.48. Both benchmarks are down 20 per cent since peaking at four-year highs in early October. This is despite the fact that Saudi Arabia cut 500K barrels for December and signalled that it looks like OPEC is going to cut production.

But Trump has made it clear he wants oil prices to fall.

"Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!"

That led to a sharp price drop on Monday and the sell-off continued into Tuesday.

With U.S. production alone estimated to have hit 11.6 million bpd earlier this month as per figures from the Energy Information Administration, it's no wonder OPEC sees the United States as the biggest driver behind non-OPEC supply growth, which it sees this year at 2.31 million bpd.

Top crude exporter Saudi Arabia has watched with alarm how supply has started to outpace consumption, fearing a repeat of a glut that brought a price crash in 2014.

Merrill Lynch says USA crude production will break through 12 million bpd in 2019, supporting oil exports to the rest of the world. That would represent a growth rate of 2.23 million bpd for 2019 from 2018, an upward revision by a considerable 120,000 bpd from OPEC's October Monthly Oil Market Report.

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